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North American Bond Research – November 23, 2020

Posted on November 23, 2020
HIGH YIELD BOND RESEARCH
November 23, 2020
Bond Markets

GLOBAL MARKETS WERE MIXED TO HIGHER AS MORE VACCINES ARE SHOWING HIGH EFFICIENCIES. THE LOCKDOWN IN EUROPE IS SHOWING PROMISE, BUT IN THE US MORE STATES ARE SHUTTING DOWN. 10 Year Treasury notes were UP 2.8 bps. S&P +0.56%, Dow +1.12%, NASDAQ +0.22%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 60 MILLION+ CASES AND 1.4 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 12.72 MILLION+ CASES AND 264000+ DEATHS. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Hertz Corp (The) (USD) 7% 1/15/2028 made analysts’ ‘Conviction Buy’ list. (See the chart below for Hertz Corp  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Pacific Gas & Electric Co. 4.95% 7/1/2050 +1.1%
  Constellation Brands Inc. 4.25% 5/1/2023 +0.4%
  Vale Overseas LTD 6.25% 8/10/2026 +0.3%
  St Marys Cement Inc. 5.75% 1/28/2027 Reg S +0.2%
  Lennar Corp. 4.75% 5/30/2025 +0.5%
–   Lennar Corp. 4.75% 11/15/2022 -0.5%
  Micron Technology Inc. 4.185% 2/15/2027 -0.3%
  Ford Motor Co. 8.5% 4/21/2023 -0.1%
  MPT Operating Partnership LP 5% 10/15/2027 -0.1%
  NGL Energy Partners LP 7.5% 11/1/2023 -0.5%
Pacific Gas & Electric Co.   4.95% 7/1/2050
Constellation Brands Inc.   4.25% 5/1/2023
Vale Overseas LTD   6.25% 8/10/2026
Lennar Corp.   4.75% 11/15/2022
St Marys Cement Inc.   5.75% 1/28/2027 Reg S
Lennar Corp.   4.75% 5/30/2025
Service Properties Trust   5.5% 12/15/2027
Micron Technology Inc.   4.185% 2/15/2027
Ford Motor Co.   8.5% 4/21/2023
Bank of Nova Scotia   FLT% 9/15/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.02% 0.39% 1.10% 1.77% 6.65% 8.10%
Mining -0.05% 0.87% 5.53% 51.03% -6.10% -2.69%
Construction -0.04% 0.58% 1.15% 8.31% 8.46% 10.02%
Manufacturing 0.00% 0.42% 2.01% 3.97% 5.50% 7.69%
Transportion, Communication, Electric/Gas -0.03% 0.41% 1.62% 4.53% 5.69% 7.77%
Wholesale 0.04% 0.44% 1.25% 1.19% 4.29% 6.48%
Retail 0.01% 0.58% 1.63% 4.77% 4.89% 7.47%
Finance, Insurance, Real-Estate -0.03% 0.49% 2.38% 4.12% 4.90% 6.72%
Services -0.06% 0.28% 2.25% 3.84% 5.80% 8.05%
Public Administration 0.11% 0.22% 0.90% 3.36% 9.32% 11.27%
Energy 0.02% 1.12% 4.75% 43.90% -4.78% -0.79%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 11/23/2020)
1. Carnival: $1000MM senior unsecured notes (B2/B)

2. American Bath: $335MM senior unsecured notes (Caa2/CCC+)

3. Sinclair: $550MM senior secured notes

4. Ancestry: $450MM senior secured notes (B1/B+)

5. Ancestry: $550MM senior unsecured notes (Caa1/CCC+)

6. Presidio Holdings: $125MM secured notes (B1/B)

7. Empire Resorts Inc.: $475MM senior secured notes (B+/B+)

8. NRG Energy Inc.: $2361MM secured and unsecured notes

9. LABL Inter: $500MM senior PIK toggle (/B-)

10. Franchise Group: $650MM senior secured notes (B1/B+)

Additional Commentary

NEW ISSUANCE WATCH: No New Issues.
Top Widening Loans Top Narrowing Loans
Alorica (USD) TL L+375 06/30/2022
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Casper Bidco (EUR) TL E+850 07/30/2027
NPC International Inc. (USD) TL L+350 04/20/2024
BioClinica Inc. (USD) TL L+825 10/06/2024
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025
Greenway Health LLC (USD) TL L+375 02/16/2024
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Aptean Inc. (USD) TL L+850 04/24/2027
Monotype Imaging Inc. (USD) TL L+550 10/11/2026

Loans and Credit Market Overview


SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

  • Symantec Corp., Broadcom LTD, Toll Brothers Inc., Cole-Parmer Instrument Co.

OVERALL CREDIT MARKET:

Long-term bond yields are expected to hit a cyclical peak in 2019 given tight fiscal policy and lagging global economies. Europe remains checked by stubbornly low inflationary forces.  Positive effects remained in force:

  • TED spread held below 14 bps (basis points), as of 11/23/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
November 23, 2020
Bond Markets

EUROPEAN MARKETS WERE HIGHER AS PROGRESS IS BEING MADE TO TAME THE VIRUS. US MARKETS FELL AS TREASURY SECRETARY MNUCHIN UNEXPECTEDLY DEMANDED UNUSED PPP MONEY BACK FROM THE FED. 10 Year Treasury notes were down 2.5 bps. S&P -0.68%, Dow -0.75%, NASDAQ -0.42%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 58 MILLION+ CASES AND 1.38 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 12.3 MILLION+ CASES AND 260000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Halliburton Co. (USD) 5% 11/15/2045 made analysts’ ‘Conviction Buy’ list. (See the chart below for Halliburton Co.  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   JPMorgan Chase & Co. VAR% 11/19/2026 +0.1%
  Bristol-Myers Squibb Co. 0.75% 11/13/2025 +0.1%
  Citigroup Inc. 2.572% 6/3/2031 +0.3%
  JP Morgan Chase & Co. 3.25% 9/23/2022 +0.0%
  Coca-Cola Co. 1.65% 6/1/2030 +0.0%
–   Verizon Communications Inc. 2.65% 11/20/2040 -0.2%
  Anheuser-Busch Inbev Worldwide Inc. 4.5% 6/1/2050 -1.2%
  Micron Technology Inc. 2.497% 4/24/2023 -0.0%
  Boeing Co. 5.805% 5/1/2050 -0.2%
  Verizon Communications Inc. 3% 11/20/2060 -0.6%
JPMorgan Chase & Co.   VAR% 11/19/2026
Verizon Communications Inc.   2.65% 11/20/2040
Anheuser-Busch Inbev Worldwide Inc.   4.5% 6/1/2050
Bristol-Myers Squibb Co.   0.75% 11/13/2025
Micron Technology Inc.   2.497% 4/24/2023
Boeing Co.   5.805% 5/1/2050
Verizon Communications Inc.   3% 11/20/2060
Citigroup Inc.   2.572% 6/3/2031
Suzano Austria GmbH   7% 3/16/2047 Reg S
JP Morgan Chase & Co.   3.25% 9/23/2022
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.09% 1.10% 1.87% 1.48% 7.69% 8.45%
Construction 0.12% 0.86% 2.02% 3.70% 8.27% 8.71%
Manufacturing 0.05% 0.72% 1.34% 1.59% 9.06% 9.62%
Transportion, Communication, Electric/Gas 0.15% 1.05% 1.82% 1.49% 10.40% 10.80%
Wholesale 0.04% 0.64% 1.68% 2.48% 9.65% 10.51%
Retail 0.05% 0.87% 1.64% 1.78% 10.47% 11.13%
Finance, Insurance, Real-Estate 0.01% 0.48% 1.07% 1.34% 7.73% 8.22%
Services 0.04% 0.73% 1.17% 1.45% 8.36% 8.61%
Public Administration 0.02% 0.06% 0.02% 0.05% 5.05% 4.99%
Energy 0.12% 1.15% 2.02% 1.41% 6.56% 7.85%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]

(None Current 11/23/2020)
Additional Commentary

NEW ISSUANCE WATCH:     AES Corp. sold $1800MM in notes.
Top Widening Loans Top Narrowing Loans
Alorica (USD) TL L+375 06/30/2022
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Casper Bidco (EUR) TL E+850 07/30/2027
NPC International Inc. (USD) TL L+350 04/20/2024
BioClinica Inc. (USD) TL L+825 10/06/2024
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025
Greenway Health LLC (USD) TL L+375 02/16/2024
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Aptean Inc. (USD) TL L+850 04/24/2027
Monotype Imaging Inc. (USD) TL L+550 10/11/2026

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

  • Symantec Corp., Broadcom LTD, Toll Brothers Inc., Cole-Parmer Instrument Co.

OVERALL CREDIT MARKET:

Long-term bond yields are expected to hit a cyclical peak in 2019 given tight fiscal policy and lagging global economies. Europe remains checked by stubbornly low inflationary forces.  Positive effects remained in force:

  • TED spread held below 14 bps (basis points), as of 11/23/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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